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Gas prices too high. Blame India?

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Gary Cameron/Reuters/File

(Read caption) A woman operates a gas pump at an Exxon station next to the Watergate complex in Washington earlier this month. Average gas prices in the nation's capital are just below $4.13 a gallon, third highest in the nation after Hawaii and California, according to GasBuddy.com

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Who's to blame for gas prices now hovering near a national average of $3.80 a gallon? Take your pick: Iran, market speculators, oil companies, India.

India? Really?

Yes. Already the fourth largest energy consumer in the world, India's demand for oil looks set to rise inexorably as more of its people buy cars and take to the road. Ditto for China and other emerging markets. Their rising demand is pushing up prices for everyone.

This consumer competition is usually subtle. For decades, Americans were king of the road. When they put the pedal to the metal, the world rushed to produce the oil and gasoline to fuel the ride. (The exceptions, from OPEC nations, were temporary.)

Now, however, world producers of oil and gas are not going to jump quite so fast. There are other, more dynamic markets to serve than the United States.

Have you driven on the East Coast, lately? Prices surged there late last month for all the normal reasons plus one: the increasingly dire state of refining in the Northeast. 

The East Coast facilities are old and set up to process the wrong kind of fuel (crude from Europe and Africa, which is selling at a premium because of the West's tensions with Iran). They're also located in the wrong place. Although the Northeast market is huge, it is stagnant. Regional demand for gasoline is actually down 7 percent since its peak in 2005.

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